LACONIA — "It's going to be extremely, extremely difficult to do what we need to do," School Superintendent Phil McCormack told the Budget and Personnel Committee of the School Board to open discussion of the 2016-2017 school district budget. "We all have to feel some pain and I think we will," he added.
Without introducing new programs or expanding existing ones, expenditures are projected to increase by $526,000, which consists of $390,000 for health insurance, $60,000 for workers compensation, $26,000 for payroll costs, $15,000 in transportation expenses and $35,000 in utility charges. At the same time, business administrator Ed Emond anticipated that reductions in state education funding and tuition at the Huot Technical Center could shrink revenue from sources other than property taxes by as much as $500,000.
In addition, the special education expenses are projected to run $480,000 beyond what was budgeted. McCormack said that nearly a third of the 183 students who enrolled in the district in August had special education needs compared to only a fifth of the equal number who left the district. Half the new students at one school qualify for special assistance, he said. By drawing on the special education trust fund and transferring monies from other accounts, McCormack expected to cover the shortfall by the end of the current school year, but noted "we will have depleted our emergency funding sources."
Finally, the collective bargaining agreements with the Laconia Education Association, the union representing the teachers, as well as those with unions representing the support and custodial staffs, expire on June 30. If new contracts are negotiated and ratified, funding for any increases in compensation and benefits would be included in the 2016-2017 school district budget.
Meanwhile, the school district, like the city, is bound by the tax cap.
The tax cap limits the annual increase in total expenditures funded by property taxes to the rate of inflation, measured by the Consumer Price Index — Urban (CPI-U), for the prior calendar year, plus an additional amount representing the value of new construction, which is calculated by multiplying the value of building permits less the value of demolition permits issued between April 1 and March 31 by the prior year's property tax rate.
This year, for the first time since the tax cap was first applied in 2006, the CPI-U is projected to be at or near zero. In other words, the only increase in the amount to be raised by property taxes will be that represented by the value of new construction. City Manager Scott Myers expects the value of new construction to end the year on March 31 at about $31 million, representing an increase of $688,200 in the amount to be raised by property taxes, or slightly more than half of the $1,289,636 increase of a year ago. Since the increase is shared between the city, school district and county, about 60 percent, or some $413,000, would be allotted to the school district.
Emond said that he has yet to calculate precisely how much expenditures must be trimmed to budget within the limits of the tax cap, but anticipates that the amount could approach $1 million.
McCormack told the committee that "we can't continue to do business the way we've been doing it, with the financial situation we are faced with." The administration, he said, has begun considering options, which, as they are analyzed and refined, it will report to the committee.
To open discussion, McCormack offered two options: restructuring the three elementary schools and reconsidering the minimum standards set by the New Hampshire Department of Education, which he emphasized are "only at the conceptual stage."
For example, McCormack said that preschool through second-grade pupils could be enrolled at the two smallest elementary schools while third grade through fifth grade would be taught at the largest. He acknowledged this would require "significant reshuffling of personnel and resources," but teaching all fifth-grade pupils at one school could improve the transition to middle school while reducing operating costs.
"I think we'd be creating a headwind for ourselves," said Scott Vachon, who quickly dismissed the suggestion. He described the elementary schools as "community schools," and said flatly "I just couldn't do it."
Likewise, Mike Persson noted that each school has its own PTO, sense of pride and fundraising effort.
"The parents are invested," he said, "and it's not just an emotional attachment."
He also questioned the impact on transportation costs.
Turning to the minimum standards, McCormack suggested carefully reviewing programs and services "above and beyond what the state requires" in seeking to trim expenses. Persson agreed with reviewing programs "not core to our mission," while stressing that "cuts must not jeopardize the educational achievement of our students.
Furthermore, McCormack remarked that "cutting some sports is obviously on the table."
"I'm certainly not going to ignore the educational aspects of any decision," McCormack assured the committee. "But, we've been dealt a hand and we have to play it. We will not solve this problem by entering into with blinders on."
Vachon reeled off a long list of items he suggested might offer savings, including purchasing policies, advertising budgets, transportation costs and summer school programs as well as copyrighting and selling school logos and eliminating yearbooks at the elementary and middle schcols. Moreover, he said that he also had proposals for reducing personnel costs that could only be discussed in a nonpublic meeting.
Persson turned from expenses to revenues, suggesting that the district consider charging a fee for sports and drama for those who could afford to pay and seeking grants and public-private partnerships. He also proposed adopting a "cooperative fundraising model" by which monies raised by different groups and concession sales would be pooled and distributed according to merit and need much like the Greater Lakes Region Children's Auction.
"Fundraising is not going to solve this budget problem," McCormack said, "but it may help. It is dangerous to put a lot of faith in fundraising." He reminded the committee that the district "has been very successful at grant writing and securing grant funding."
McCormack closed by stressing that he expected the administration and the committee to work closely in developing, refining and weighing different options. "We want this committee to know what's happening," he said. "There are some very difficult decisions to come at all levels that you may have to hold your nose and vote on."